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The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

wsj.com

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Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#51

Post by dragonwriter »

paulpauper wrote: post #4

Zhong was caught because he made basic operational security errors, like address reuse (which is how he was caught by linking fraud wallet to exchange wallet) , static IP, using a KYC exchange in 2017 to convert BCH into BTC, etc. Not because Bitcoin was cracked. After being caught, Zhong voluntarily relinquished his passwords to encrypted wallets and other bitcoin, not that the crypto was cracked. I wonder how the f…

> I wonder how the feds bypassed the statute of limitations on this.

I don’t think they did; if the BCH transaction was in 2017 was the subject of fraud, it was within the statute of limitations when he was publicly charged.

> I am guessing his attempts at laundering the money and spending, reset the clock.

They didn’t “reset the clock” on the fraud involved in obtaining the bitcoin initially, but they were likely generally, on their own, fraudulent transactions.

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#52

Post by pmarreck »

aaronmdjones wrote: post #50
ucha wrote: post #32

The statute of limitation for wire fraud is 5 years. How did he get charged under that statute when he stole funds from Silk Road in 2012? Did they charge him for converting BCH into BTC in 2017? I tried to look up the case but couldn't find anything that shed a light on that.

> The statute of limitation for wire fraud is 5 years. How did he get charged under that statute when he stole funds from Silk Road in 2012? This is a very simplistic view and this mistake is made a lot. There are several reasons why the statute of limitations could either be longer than 5 years or not yet expired even though it is 5 years: - Tolling. This is when the suspect exits your jurisdiction, preventing you f…

So basically if he had simply sat on the wallet keys for 5 years and 1 day, he’d be home free?

If so, that is even more tragic than his inability to get anyone to wet his whistle even with all that cash >..<

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#53

Post by dragonwriter »

NotYourLawyer wrote: post #16
paulpauper wrote: post #4

Zhong was caught because he made basic operational security errors, like address reuse (which is how he was caught by linking fraud wallet to exchange wallet) , static IP, using a KYC exchange in 2017 to convert BCH into BTC, etc. Not because Bitcoin was cracked. After being caught, Zhong voluntarily relinquished his passwords to encrypted wallets and other bitcoin, not that the crypto was cracked. I wonder how the f…

> he was caught by linking fraud wallet to exchange wallet How are you supposed to turn fraudulently obtained btc into dollars without doing that?

> How are you supposed to turn fraudulently obtained btc into dollars without doing that?

That’s the neat thing… You don’t.

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#54

Post by from »

NotYourLawyer wrote: post #16
paulpauper wrote: post #4

Zhong was caught because he made basic operational security errors, like address reuse (which is how he was caught by linking fraud wallet to exchange wallet) , static IP, using a KYC exchange in 2017 to convert BCH into BTC, etc. Not because Bitcoin was cracked. After being caught, Zhong voluntarily relinquished his passwords to encrypted wallets and other bitcoin, not that the crypto was cracked. I wonder how the f…

> he was caught by linking fraud wallet to exchange wallet How are you supposed to turn fraudulently obtained btc into dollars without doing that?

I assume people involved in this sort of activity would convert to Monero first (can be done without KYC in a 100 different places). Then they would go to localmonero or a site like it and select cash in the mail. They would round to the nearest XMR at a time when transacting on localmonero so that even if the exchangers they used were compromised the government wouldn't be able to link them to the initial BTC->XMR swap based on transaction amounts.

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#55

Post by artdigital »

user3939382 wrote: post #39
phyzome wrote: post #19

Say it with me: "Bitcoin is not, and never was, anonymous."

Something something tornado cash?

Tornado cash is a smart contract on ethereum

Mixers on Bitcoin are usually centralized and operated by a person, so they get (and have been) cracked way more easily

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#56

Post by from »

nanidin wrote: post #21
NotYourLawyer wrote: post #16

Earlier quoted context omitted.

> he was caught by linking fraud wallet to exchange wallet How are you supposed to turn fraudulently obtained btc into dollars without doing that?

I believe you can buy envelopes of cash on the darknet - though then you’re probably at high risk of receiving counterfeits or running into a sting.

There is a reputation system on basically all p2p exchange sites, they wouldn't be able to scam for long.

> running into a sting

This was the basis of Operation Dark Gold. They had a ton of other evidence against the people they rounded up, I think it just helped them find targets. Receiving cash in the mail is not illegal.

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#57

Post by caminante »

antibasilisk wrote: post #49
nanidin wrote: post #21

Earlier quoted context omitted.

I believe you can buy envelopes of cash on the darknet - though then you’re probably at high risk of receiving counterfeits or running into a sting.

You also have to contend with a terrible conversion rate.

"terrible"?

We're talking about 1e9 orders of magnitude, here. I'll take that fraction.

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#58

Post by cvoss »

In some of the supplementary documentation for this press release, you can see the government's case for seizing Zhang's assets on the grounds that they are traceable to a different convicted criminal (Ulbricht, who is the victim of Zhang's fraud), whose assets were already forfeited due to Ulbricht's conviction.

I'm curious though, if Zhang had not plead guilty and the government had not succeeded in getting a wire fraud conviction for Zhang, would their argument that the assets are forfeitable under Ulbricht's conviction have failed also? In other words, was it necessary to convict Zhang to finish seizing Ulbricht's assets, or could they have won a case for seizure without a conviction for Zhang?

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#59

Post by from »

user3939382 wrote: post #39
phyzome wrote: post #19

Say it with me: "Bitcoin is not, and never was, anonymous."

Something something tornado cash?

It's a felony to use Tornado Cash now. And the government interprets sanctions law extraterritorially so you're not safe in other countries either.

Re: The U.S. cracked a $3.4B crypto heist and Bitcoin’s anonymity

#60

Post by ucha »

aaronmdjones wrote: post #50
ucha wrote: post #32

The statute of limitation for wire fraud is 5 years. How did he get charged under that statute when he stole funds from Silk Road in 2012? Did they charge him for converting BCH into BTC in 2017? I tried to look up the case but couldn't find anything that shed a light on that.

> The statute of limitation for wire fraud is 5 years. How did he get charged under that statute when he stole funds from Silk Road in 2012? This is a very simplistic view and this mistake is made a lot. There are several reasons why the statute of limitations could either be longer than 5 years or not yet expired even though it is 5 years: - Tolling. This is when the suspect exits your jurisdiction, preventing you f…

Thanks for explaining this!

It seemed to me that option #1 only applied if you were a fugitive and your whereabouts were unknown, not when you simply leave the state or country.

As to furtherance, I wonder how precise the definition of it is; is using proceeds of a crime, furtherance of a crime? Is obfuscating a crime, furtherance of a crime?

Edit: This answers most of my questions and the answer seems to be "it's complicated" https://sgp.fas.org/crs/misc/RL31253.pdf

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